The last 5-6 years investors have been motivated to follow gold. The trading level has increased a hundred fold and then some. Thus, GLD, SPDR Gold Trust has become the second largest ETF by dollar size, $39.9 billion. The interest is not slipping either and the break above resistance at the $110 level shows new life for the precious metal. As you can see on the chart below the recent test of support at the $104 mark has been in consolidation range the last 5 weeks.

Technically the breakout of the range is a positive sign. Volume has been on the light side with the breakout day showing only average volume. We have been tracking the ETF for an opportunity on a break of the downtrend line off the December high near $120. The test of support near $104 and the resulting bounce showed some signs of life. The gap open on February 16th (red arrow) was a positive move as it took out the downtrend line. However, we moved to resistance at $110 on the same day. This is were we looked for a test of the break out.

That test played out over the next five trading days and then bounced off support of the trendline to the upside on above average volume. This was our defined entry point $107.50. The stop would have been a break below $105 and our target is $120.  We now move our stop to $108.20. This is still a playable move on the break above $110. Look for a test of the break or definable follow through as your entry point. Use the same stop and target for the opportunity short term.

As we always discuss, defined and disciplined entry point, stop and target on every position you add to your portfolio.